| Investing Quotes |
| Written by Tracy A. Phaup | |
| February 26 2008 | |
 It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person's ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision-making.Alan Greenspan Quotes The Internet doesn't change everything. It doesn't change supply and demand. It doesn't magically allow you to build businesses by turning investors' money into operating expenses indefinitely. The money always runs out eventually.. the Internet doesn't change that, as we have seen. The boom was healthy too, even with its excesses. Because what this incredible valuation craze did was draw untold sums of billions of dollars into building the Internet infrastructure. The hundreds of billions of dollars that got invested in telecommunications, for example. Wall Street people learn nothing and forget everything. Most of the time common stocks are subject to irrational and excessive price fluctuations in both directions as the consequence of the ingrained tendency of most people to speculate or gamble... to give way to hope, fear and greed. The individual investor should act consistently as an investor and not as a speculator. This means.. that he should be able to justify every purchase he makes and each price he pays by impersonal, objective reasoning that satisfies him that he is getting more than his money's worth for his purchase. I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. I'm a firm believer that to really understand a business takes years, not months. As an investment analyst you think you understand a business from the outside, but the reality is that, once you are inside, you can go on learning for five or ten years. I'd always had a childhood ambition to go into the investment capital business, and spent twenty-odd years in it. But the thought of spending the second half of my career in the same business was boring, so I looked around for other opportunities. (The Black-Scholes Formula) has been used to calculate risk throughout the financial world. Not it's under attack, and investors may soon be looking for a new way to assess risk. Small decisions tend to be based on what the market does, and are likely to be wrong. That's why you should implement policies in a broad frame rather than make decisions in a narrow frame. Two decisions really matter: how much of your wealth you want to put at risk and how much risk you want to take with it. Our industry expertise (at KKR) enables the firm not only to make better investment choices but also to win the confidence of senior management and sellers, which has enabled us to purchase many companies on an exclusive basis. Investing has a few simple rules that everyone knows are true yet most people find amazingly hard to live by. Diversity; don't chase hot returns, don't think you can outsmart the market. If you did nothing more and nothing less, your success would be all but ensured. When I'm bearish and I sell a stock, each sale must be at a lower level than the previous sale. When I am buying, the reverse is true. I must buy on a rising scale. I don’t buy long stocks on a scale down, I buy on a scale up. The price pattern reminds you that every movement of importance is but a repetition of similar price movements, that just as soon as you can familiarize yourself with the actions of the past, you will be able to anticipate and act correctly and profitably upon forthcoming movements. I never hesitate to tell a man that I am bullish or bearish. But I do not tell people to buy or sell any particular stock. In a bear market all stocks go down and in a bull market they go up. As long as you enjoy investing, you'll be willing to do the homework and stay in the game. That's why I try to make the show so entertaining, because if you aren't interested, you'll either miss the opportunity to make money in the market or not pay enough attention and end up losing your shirt. Picking the right stocks is one of the hardest parts of investing, and every night on Mad Money, I try to take some of that burden off your shoulders. I rarely think the market is right. I believe non dividend stocks aren’t much more than baseball cards. They are worth what you can convince someone to pay for it. Endangered species: Hedge fund manages will warn that inflows to their fund could slow during the next 12 months due to a global shortage of suckers. My wheels are running. My investments are local, regional and international. Many receive advice, few profit by it. I have a problem with too much money. I can't reinvest it fast enough, and because I reinvest it, more money comes in. Yes, the rich do get richer. We go to school to learn to work hard for money. I write books and create products that teach people how to have money work hard for them. Investors have very short memories. I swore I was going to exclusively collect assets and not liabilities for the rest of my life. I swore never to take gambles I couldn’t back up, or that I couldn’t afford to lose. And, I’ve stuck with that ever since. Where you run into trouble is when you focus just on your investment accounts and their losses. But if you look at the big picture, you'll see that to reach the goals you want, you're going to have to do some tough work, like riding through choppy markets. Having perspective can give you comfort.
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| Last Updated ( April 01 2008 ) |
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